The most common malpractice in all of Trading: Back-testingGiven ANY in- or out-of-sample time series, including purely random, synthetic data, anyone can generate (inflate) ANY Sharpe Ratio by repeatedly applying different trading or investment strategies to the same time series sample!
By definition, purely random data has no discernible structure. Consequently, no method can exist to predict such a sequence - I.e., Sharpe Ratio = 0 must hold in all instances.
Yet, ... See main graph!
In the past It has been shown just how easy it is to generate Sharpe Ratios of 4, 5 or even >6, on any data, including on purely random, synthetic time series data when in fact, the only possible value in those instances should be S.R. = 0.
As a matter of fact, this misleading (self-defeatists?) practice is so common and wide spread in finance and trading that the American Statistical Association considers it "unethical" (American Statistical Association ). (More importantly, it is a remarkably expensive way to fool oneself.)
The above stems from applying the same rejection threshold for the null hypothesis under multiple testing will grossly underestimate the probability of obtaining a false positive.
Unlike in the "other sciences", there is no "replication crisis" in finance or trading, simply because such checks don't even exist there - since those would be impossible to carry out. (Is that why the only two kinds of academic papers which never get revised or retracted are written in the fields of Finance and Theology?)
The bottom line;
In the common case of testing a trading or investment system, given a set of out-of-sample time series, one MUST increase the rejection threshold for the null hypothesis in proportion to the number of times ("peeks") such tests are carried out! (Good luck fooling yourself that way!)
Anything less is just simple curve-fitting!
For more in-depth explorations:
Marcos López de Prado, Michael J. Lewis
codemacher.com
Rejection
CHFJPY - Wait For The Bears ↘️Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst.
on H4: Left Chart
As per my last analysis (attached on the chart), CHFJPY rejected our 158.5 support and traded higher.
Now CHFJPY is sitting around a strong supply zone so we will be looking for sell setups on lower timeframes.
on M30: Right Chart
CHFJPY is forming a potential double top pattern but it is not ready to go yet.
For the bears to take over, we need a momentum candle close below the gray neckline.
Meanwhile, until the sell is activated, CHFJPY would be overall bullish and can still trade higher.
📚 Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich
AAVE will continue his falling?!BITGET:AAVEUSDT touched the Lower High's trendline and immediately went back down for a -4,56% (respect the +11% that was made before).
This means that BITGET:AAVEUSDT rejected the trendline and went back.
This could indicate that BITGET:AAVEUSDT could go short again for some time, in the extreme case it could touch again the blue support.
Or BITGET:AAVEUSDT could retest the trendline and even break it and go up to +100$ or even more.
GBPAUD I Short term move downward Welcome back! Let me know your thoughts in the comments!
** GBPAUD Analysis - Listen to video!
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GBPAUD I Headed down in the short term Welcome back! Let me know your thoughts in the comments!
** GBPAUD Analysis - Listen to video!
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GBPNZD - Looking For Sell Setups ↘️Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst.
on WEEKLY: Left Chart
GBPNZD is sitting around a strong weekly resistance in green, so we will be looking for sell setups on lower timeframes.
on H4: Right Chart
GBPNZD has been overall bearish trading inside the red channel and it is currently sitting around the upper trendline.
🏹 So the highlighted purple circle is a strong area to look for sell setups as it is the intersection of the green resistance and upper red trendline.
As per my trading style:
As GBPNZD is sitting around the purple circle zone, I will be looking for bearish reversal setups (like a double top pattern, trendline break , and so on...)
📚 Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich
Dogecoin - pumpDogecoin did not pump due to the change made on twitter by Elon Musk.
The real reason is that Dogecoin has completed the daily accumulation cycle. We can see how the daily resistance level was broken and retested, and the 4-hour target was reached, from there we can see a rejection. In the next period we can expect a test of the daily rangetrend.
The final shooting star for the AUDAUDUSD presented a shooting star at a key area of confluence on Wednesday. Price failed to break this confirmed evening star. Thus creating a volatile indecision bearish engulfing at the high. I will short upon a retest of the high or the presentation of a reversal candlestick on the back of the trendline if broken. Price is still pushing for its highest point. ADX is still very bullish for now.
EURAUD - OverSold Zone Ahead 👌Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst.
EURAUD is overall bearish trading inside the falling channel in red, and we are currently approaching the lower bound.
Moreover, the zone 1.590 is a support zone .
🏹 So the highlighted purple circle is a strong area to look for buy setups as it is the intersection of the blue support and lower red trendline.
As per my trading style:
As EURAUD is sitting around the purple circle zone, I will be looking for bullish reversal setups (like a double bottom pattern, trendline break , and so on...)
📚 Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich
XRP - Rejection from a danger zone. Capitulation Likely To Come.Ever since XRP reached its high of $0.585 it has been trying to break higher with no cuccess.
If we extend fib. levels form the top to the bottom of $0.41 we can see that the XRP has attempted to break higher tho has been rejected for the second time recently. Rejection from a .786 fib. retracement level is common as it presents a danger zone where prices if get rejected can revers the trend temporary.
Given that XRP tends move the last in the market ether to the upside or downside i thing we could be on a verge of a last capitulation as the rest of the market experiences second "flush" taking the whole market a little lower before reversing upwards. A final "flush" is what XRP went trough as SEC filled a lawsuit against Ripple in 2020.
RSI is also showing bearish divergences.
No one knows how deep can capitulation go but imo. it could go anywhere from $0.41-$0.36. We have to look for a high buy volume which typically a sign of a reversal.
DISCLAMER
I am not a financial advisor so non of this should be taken as a financial advise. Be well
GBPAUD I Potential rise from 186 zoneWelcome back! Let me know your thoughts in the comments!
** GBPAUD Analysis - Listen to video!
We recommend that you keep this pair on your watchlist and enter when the entry criteria of your strategy is met.
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XRP - TRIO RETEST 3️⃣ UPDATEHello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst.
As per my last analysis (attached on the chart), we were waiting for XRP to approach the 0.42 zone to look for buy setups as it was the intersection of three rejection zones.
Now XRP rejected our purple zone and traded higher sitting around the upper red trendline acting as a non-horizontal resistance.
🏹 For the bulls to remain in control, we need a break above the last major high in orange and upper red trendline.
Meanwhile, the bears can still kick in for one more correction. In this case, as we approach the green support again, we will be looking for new short-term buy setups.
📚 Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich
CHFJPY I It will correct downward Welcome back! Let me know your thoughts in the comments!
** CHFJPY Analysis - Listen to video!
We recommend that you keep this pair on your watchlist and enter when the entry criteria of your strategy is met.
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Is this the top for Bitcoin?One of the top reasons why i am turning bearish and puting my 46k level on hold is because bears have turned bullish after we broke every target that they set.
We also have volume decrising on the every push up which is the indication that the buying pressure is slowing down.
On the weekly timeframe we have a ascending channel that we just touched so rejection should come.
However on the 4 hourly timeframe we have ascendig channel and i expect a move up until we reach 31.2k where i am going to short, of course with the proper stop loss because we are still in abullish trend.
What do you are we going to get rejeted from the weekly channel.
Feel free to leave a comment.
If you like my ideas please follow me and like the post because you can find always something interesting on my profile, i am new to Treadingview but i have 6 years expirience in trading.
Thanks for wathing.
BTC TO THE MOON!!!
NZDCAD - Approaching A Strong SupportHello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst.
NZDCAD is overall bearish trading inside the falling channel in orange and previously we have been trading it by looking for sell setups around the upper trendline and buy setups around the lower trendline.
Now NZDCAD is approaching the lower orange trendline again.
Moreover, the zone 0.83 is a strong support.
🏹 So the highlighted purple circle is a strong area to look for buy setups as it is the intersection of the blue support and lower orange trendline. (acting as non-horizontal support)
As per my trading style:
As NZDCAD approaches the lower purple circle zone, I will be looking for bullish reversal setups (like a double bottom pattern, trendline break , and so on...)
📚 Always follow your trading plan regarding entry, risk management, and trade management.
Good luck!
All Strategies Are Good; If Managed Properly!
~Rich